Page 39 - Crisis in Higher Education

14 • Crisis in Higher Education

1.4 HIGHER EDUCATION HAS THIRD-PARTY PAYERS
Higher education is similar to healthcare in that customers do not pay all
or even most of the costs. Employers and governments pay the lion’s share
of healthcare costs. In higher education, Figure 1.1 shows that the costs are
shared. Students pay a portion of the cost, and so do parents, other fam-
ily members, and friends. Publically supported colleges and universities
receive payments from state and local governments that subsidize tuition,
and the federal government offers grants, guaranteed student loans, and
work-study jobs for students who qualify. Institutions of higher learning
award scholarships that help students pay for their education. Scholarships
and donations are available from various organizations such as unions,
churches, fraternal organizations, and foundations.
A study conducted by Ipsos Public Affairs for Sallie Mae estimates how
the typical family paid for higher educations in 2014–2015 (see Figure 1.2).
It may be surprising that the largest share was paid by parents from income
and savings, 32%, and borrowing, an additional 6%, which totals 38%.
Other family members and friends chipped in 5%. Scholarships and grants
were second at 30% with a substantial amount coming from institutions

Students’
borrowing
16% Parents’ income
and savings
32%
Students’ income
and savings
11%

Parents’
borrowing
6%
Scholarships Relatives and
and grants friends
30% 5%

FIGURE 1.2
How typical family paid for higher education in 2014–2015. (Courtesy of SallieMae, How
America Pays for College 2015, 2015. http://news.salliemae.com/files/doc_library/file/
HowAmericaPaysforCollege2015FNL.pdf)